Jay Powell really wants Americans to know that he doesn't think about politics

Jay Powell really wants Americans to know that the Fed does not take into account the presidential election or politics this year when setting monetary policy.

The Fed chairman went out of his way to make this point last week while delivering a speech that devoted more time to discussing the Fed's independence from personal or political bias than he did to interest rates or inflation.

“Fed policymakers serve long terms that do not coincide with election cycles,” Powell said while speaking to an audience at Stanford University. “This independence enables and requires us to make our monetary policy decisions without regard to short-term political issues.”

During a question-and-answer session after his speech, he said, “Internally we have peace of mind about this” and “We will do what we will do and we will do it for economic reasons and that's it.”

He added, “I have no concerns that it will be a problem for us” and that “it doesn't matter what the election schedule says.”

STANFORD, CA - APRIL 03: Federal Reserve Chairman Jerome Powell gives a look before speaking during the Stanford Forum on Business, Government and Society at Stanford University on April 03, 2024 in Stanford, California.  Powell spoke at Stanford University's premier Business, Government and Society Forum on the topic of Responsible Leadership in a Polarized World.  (Photo by Justin Sullivan/Getty Images)

Federal Reserve Chairman Jerome Powell before a speech at Stanford University on Wednesday. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)

Both parties are trying to influence Powell and the Fed as the November election approaches and the central bank weighs the right time – if at all – to cut interest rates after an aggressive campaign to curb inflation.

Democrats tend to want to make these cuts as quickly as possible, while Republicans, in general, want Powell to take them slowly.

Their strategies for making these points could be very different, but politicians agree on a key dynamic in an election year: Interest rate cuts before the election are likely to be beneficial for President Joe Biden and the White House — whether that is Powell's intention or not. .

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Last week was not the first time Powell has asserted the Fed's independence in 2024. He has done the same during his presidency. “60 Minutes” interview that aired In February.

“We don't take politics into account in our decisions,” Powell said in that interview. “We never do that. We never will. And I think the record — fortunately, the historical record really supports that.”

Powell has also objected in recent months when reporters or lawmakers have asked him to offer his view on other policy topics — such as whether to rein in the U.S. national debt, change the tax code, or reform the immigration system.

“It is absolutely not our role to judge fiscal policy in any way,” Powell said. He told CBS earlier this year.

On Wednesday, he returned to that topic, saying the Fed would avoid what he called “mission creep” on topics ranging from taxes to immigration and climate.

“We are not climate policymakers and do not seek to be,” he said during his speech.

His comments on climate came nearly two weeks after those from Senators Elizabeth Warren and Sheldon Whitehouse Send a message to Paul Arguing that the Federal Reserve's high interest rates are delaying clean energy developments.

US Senator Elizabeth Warren (D-Mass.) questions witnesses during a Senate Banking, Housing and Urban Affairs Committee hearing following the recent bank failures, on Capitol Hill in Washington, US, May 18, 2023. REUTERS/Evelyn HochsteinUS Senator Elizabeth Warren (D-Mass.) questions witnesses during a Senate Banking, Housing and Urban Affairs Committee hearing following the recent bank failures, on Capitol Hill in Washington, US, May 18, 2023. REUTERS/Evelyn Hochstein

Sen. Elizabeth Warren (D-Mass.) is among the lawmakers putting pressure on Federal Reserve Chairman Jay Powell. (Evelyn Hochstein/Reuters) (Reuters/Reuters)

“We urge you to lower interest rates throughout 2024 to allow for continued progress on clean energy projects and the climate and economic benefits these projects provide,” the senators, both Democrats, wrote.

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Republicans have also repeatedly criticized Powell for considering rules that would test banks' ability to withstand climate-related scenarios, arguing that they fall outside the scope of the Fed's authority.

Powell was very clear last week that the Fed would avoid climate policy.

“Policies to address climate change are the purview of elected officials and the agencies to which they have assigned that responsibility. The Fed has received no such charge.”

In a statement to Yahoo Finance after Powell's recent comments, Senator Whitehouse noted that other central banks around the world are looking closely at climate change because “if left unchecked, climate change will pose 'systemic risks' to our financial system and the broader economy.”

US Senator Sheldon Whitehouse (D-RI) speaks during a Senate Judiciary Committee hearing US Senator Sheldon Whitehouse (D-RI) speaks during a Senate Judiciary Committee hearing

Senator Sheldon Whitehouse (D.R.I.). (Evelyn Hochstein/Reuters) (Reuters/Reuters)

He also pointed to recent comments by Powell about insurance rates — high in part due to climate change — acting as a drag on the economy.

“It seems clear that the Fed must take into account climate-induced inflation and climate-induced systemic risks,” Whitehouse said.

Powell on Wednesday spoke specifically about lawmakers' attempts to drag him into partisan policy debates.

A moderator asked him to discuss how to build consensus in Washington and described what it was like to testify on Capitol Hill.

“People are always trying to convince me and my colleagues to support their point of view on financial issues or immigration issues and are thinking of an economic hook…”

Powell then simulated swinging a fishing line, drawing laughter from the audience.

“But we don't do that.”

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